Healthcare worker picks plan for greater certainty and peace of mind

Insurers have launched a myriad of retirement insurance plans that provide regular payouts, giving consumers more choices.
Insurers have launched a myriad of retirement insurance plans that provide regular payouts, giving consumers more choices. ST PHOTO: KUA CHEE SIONG

Healthcare worker Jackie Phang believes in saving for a rainy day.

She recently took that a step further and invested in a retirement insurance plan just before she turned 47 in February.

Together with Mr Dennis Hoe, her insurance planner from wealth management firm Providend, she compared three retirement plans before opting for Aviva MyRetirement.

This is her first retirement insurance plan and she wanted it to complement other investments in her portfolio, which include four whole life and endowment plans, critical illness and personal accident plans, unit trusts and Central Provident Fund (CPF) savings.

Her Aviva MyRetirement plan's annual premium is $14,948.40 - payable for eight years - which amounts to total premiums of $119,587.20.

When she turns 60, Ms Phang can look forward to guaranteed payouts of $1,200 for 10 years or total payouts of $144,000.

There is also a non-guaranteed lump sum at maturity (age 70).

According to the benefit illustration of the plan, the non-guaranteed sum worked out to $22,860 based on a projected investment return of 3.25 per cent per annum, which translates to a projected total yield of 2.22 per cent on maturity.

Based on a projected 4.75 per cent rate, Ms Phang may receive a non-guaranteed maturity lump sum of $81,159, which is a projected total yield of 3.98 per cent. These are illustrations and the actual yields would depend on the performance of the insurer's participating fund.

Ms Phang says: "I like the plan as the annual premiums are affordable. At the same time, it forces me to set aside money to pay the premiums. The plan complements what I have currently, so it fits my needs. It is part of my financial plan to stagger my insurance payouts."

One of Ms Phang's selection criteria was that she wanted her insurance payouts to be guaranteed so as to give her peace of mind and greater certainty to aid in her retirement planning.

"I wanted a fixed income kind of payout which provides more stability. With this plan, I know I will have $1,200 coming in every month for 10 years, and I don't need to worry. Coupled with my CPF Life payouts, I will at least have a few thousand dollars every month in my old age.

"In general if everything goes well, I'm quite happy with the amount that I will get back. I won't be able to get this amount if I leave my money in the bank."

Furthermore, when she turns 60, she has the option to delay the payouts if she is still working and does not need them.

Ms Phang plans to opt for the Enhanced Retirement Sum (ERS) under the CPF Life annuity scheme. The current ERS of $241,500 translates to estimated monthly payouts of $1,770 to $1,920 from age 65.

Lorna Tan

A version of this article appeared in the print edition of The Sunday Times on April 17, 2016, with the headline 'Healthcare worker picks plan for greater certainty and peace of mind'. Print Edition | Subscribe